Starting A Business
There are many ways you can start a business. One option is to “bootstrap it” where you are slowly growing your business and only buy items when needed. In other businesses, you need specific equipment or locations just to get started. However, there will come a time when you need to make a big purchase, and you need just a little capital to get you by. This is when you can start exploring other loan options. In this blog, we will go over the best business loan types for your business.
The Struggles Of Not Finding Business Loans
Some people open up their phones and look for business loans and try to get the first one they can. At some point, most entrepreneurs go through this. The frustrating part is that most of them end the same way as well. That is, upset that you were never able to secure a loan. To add insult to injury now you receive all this spam mail about loans that you “pre-approved for” that you never respond to because something about it is just off-putting.
Learning From Our Mistakes
When we start looking for a loan, most of us are obsessed with the amount. Then, everything else falls by the wayside. It comes down to knowing what to search for. Because what I am about to tell you, you already know. However, you have not utilized it in your search. That is looking for a different type of business loan. I know you have heard of SBA loan (Small Business Administration) and business term loan thrown around thinking they were the same and lines of credit. You probably never thought to look up the different types of loans.
The Different Type Of Business Loans
There are a few types of business loans and you can utilize them in a different way for your benefit. One of them is a business term loan. This is going to be one of the toughest ones to get, but not impossible. Then you have your short-term loan. It is similar to the business term loan but differs in the amount, time, and is easier to obtain. If you can’t get a term loan, then this is when you can start to think about an SBA loan. If you go through the SBA, they offer a few different loan methods they can help you with. We will touch on these later. You even have loans that target certain areas of your business. There is an equipment financing option and even accounts receivable financing. If you want a quick loan you can get a merchant cash advance. Now that you know about a couple of different loans, let’s dive a little deeper into each one of them.
The Business Term Loan
The first thing you need to pay attention to about a business term loan are the words “term loan”. Term loans are where you go to the bank to get your business loan. Now with this being a business term loan, you can get a very large sum of money. You can even get a large loan that will take you 25 years to pay back at the bank. The other reason this loan in particular is highly sought-after is that it has one of the lowest interest rates and smaller monthly payments compared to other forms of business financing. With loans this good, the banks are very selective about who receives one.
The Short Term Loan
A short-term loan is the “kid sibling” to the business term loan. It is still coming from the bank so you can still get a nice amount, but it’s fractioned in comparison. The time that you can get to pay this term loan off is up to eighteen months. That is a big difference to twenty-five years. This one should be a little easier to get next to its counterpart. Now the interest on this one is going to go up, but it is still lower than most.
The SBA Loans (Small Business Administration)
If you are not able to get a Term loan, then this could be your plan B. SBA is focused on helping small businesses. We have found a few loans that they provide that you may find useful. You have your 7(A) loan that operates similar to the business term loan. If you need to make a big purchase like a building or real estate, then this might be the loan you have been waiting for. If you only have minor expenses, you might want to look at the SBA 504 loan. Kind of like the short-term loan. If you need it fast, the SBA has the express loan to get you your loan within a few hours.
A Business Line Of Credit
A business line of credit is a loan in its own way. The difference is with a business line of credit, it works more like a credit card than a loan. Let’s say you have a full card and want to buy some equipment. You only have to pay for what you spent on it. The difference being is with other loans you get the whole loan and start paying on it right away. If you spend fifteen hundred dollars, then you owe that full amount.
Equipment and Accounts Receivables Financing
These two finance options are great little nuggets. First, we will talk about equipment financing. It is pretty simple, it’s in the name. This financing helps you with the equipment for your business. If you can find a lender in some cases, you have to pay twenty percent as a down payment. And you can get it in days. Now we look at accounts receivable financing. What this does is look at your accounts receivable and add them up. They will give you up to Eighty percent of your account receivables and they will charge you monthly until your account comes in.
MCA (Merchant Cash Advance)
You can get an MCA (Merchant Cash Advance) within hours when signing up for the loan option. The way that MCA’s work is they are your exchange is for a percentage of your future sales. The lender will either take money from your credit card sales or your bank account until your debt is paid.
What To Do With This New Information
These are just a few options that you can use to get a variety of business loans for you. There are many other loan options out there for you that may work even better. Working with a business loan professional will be beneficial to you. If you are here right now it’s because you are looking for that help.
Best Business Loan Options
KAB Credit Services has the knowledge you need to decide the right loan for you. That might mean the credit line will have low interests and long-term loans. We can even get you funding in seventy-two hours or less. What are you waiting for? Come get your money so you can get your start-up started! Call us today at (321) 267-2111 or send us a message.